International equities are playing an ever more important role in global wealth management. Despite well-accepted economic principles about the role of economic infrastructure on equity valuations, most traditional investment analysis and products do not currently incorporate the information as it is not available in a consistent, usable format.
Magni has a repeatable process for researching the economic infrastructure of countries and turning the research into investment information. Portfolios built by Magni using this process have demonstrated significant absolute and risk-adjusted performance for more than a decade using a rigorous forward-tested model.
Countries do matter when investing internationally and should be considered when making investment decisions. Further, the meaningful changes in the economic infrastructures means the country research should be continuously maintained.
An iceberg is a metaphor for traditional investment analysis regarding international equities. Most international analyses parallel domestic analyses by focusing on the traditional metrics that are akin to the visible part of an iceberg. The hidden information is like the submerged portion of an iceberg. It is key to success (or even survival) but not readily discovered.
Sustainable Wealth Creation principles were created to enable the collection and organization of country level data about the respective economic infrastructures. The resulting information can be used when making investment decisions. Sustainable Wealth Creation addresses three very important questions:
Sustainable Wealth Creation principles help answer these important questions by investigating the accounting, legal, regulatory, adjudicative, and economic structures of a country.
Economic systems change at a surprisingly fast pace. As illustrated by the nearby graph of Emerging Market weightings using the Magni analysis, over a multi-year timeframe the economic systems of countries can change significantly. Since the information varies over time, the information needs to be monitored and refreshed to gain important insights when making investment decisions involving international equities.